TL;DR:
Palace Capital is a young but fast-growing company specialising in neglected regional property portfolios and while the management have performed in an exemplary fashion so has the share price.
Introduction
Palace Capital is a company flying under the radar of most investors. With its sub-£100M market cap, short life on AIM, very recent move towards profitability and concentrated portfolio of regional assets this stealth is not a surprise. The company is, however, becoming appreciated by a wider audience as it continues to acquire assets.
In a nutshell this is a vehicle for a small team of very experienced property investors with specified strengths: "Our particular skill is with properties which have early lease expiries or break clauses and managing them to become better and more secure investments. We have recently concluded three transactions after our financial year end which will be earnings and value enhancing."
For a little more colour this is a rather nice piece (from Dec 2013) by Neil Sinclair on regional property and venturing early into the upswing:http://www.palacecapitalplc.com/palacecapital_pdf/PCA%20-%20Estates%20Gazette%20-%2014th%20December%202013.pdf
A brief history
In the beginning was Leo Insurance Services; a shell that failed to invest successfully in the insurance sector. All the company had going for it was a listing on AIM and solvency. Then along came Neil Sinclair, Stanley Davis and Andrew Perloff with a little bit of capital and a big idea to invest in property. Now Perloff I've heard of as the irascible chairman of Panther Securities, a property company in its own right, but it turns out that Neil Sinclair is also a veteran real estate man. So they bring a vast amount of experience to the table and perhaps a fair splash of hope.
Over the past four years three key transactions have turned Palace Capital from a sub-£1M shell into a profitable, dividend paying company with the potential to reach a £100M market cap. First up was the acquisition of Hockenhull Estates, a group of properties in Cheshire, for £1.8M. A pretty titchy transaction but even this stretched the company to the limit; in order to fund the purchase the directors had to borrow £1.2M, quadruple the share count to pull in £500K and pitch in almost £600K of their own money! So both a brave step and a pretty strong sign of conviction although the placing…
